But such optimism needs to be tempered because there are a host of issues the government, namely the Federal Aviation Administration needs to address before commercial space operations can truly blast off, according to a report out today from watchdogs at the Government Accountability Office.

According to the GAO report the key problems that need to be resolved include:

1. Who’s minding the store? The FAA faces challenges in ensuring that it has a sufficient number of staff with the necessary expertise to oversee the safety of commercial space launches and spaceport operations. The GAO said it raised concerns in the past that if the space tourism industry developed rapidly, the FAA’s responsibility for licensing reusable launch vehicle missions would greatly expand. The FAA’s experience in this area is limited because its launch safety oversight has focused primarily on unmanned launches of satellites into orbit using expendable launch vehicles, the GAO stated. Many companies are designing and developing space hardware that is being tested for the first time, requiring that FAA have a sufficient level of expertise to provide oversight. The FAA’s Office of Commercial Space Transportation has hired 12 aerospace engineers, bringing its total staff to 71 full-time employees. In addition the FAA has established field offices at Edwards Air Force Base and NASA’s Johnson Space Center in anticipation of increased commercial space launches, the GAO report noted.

2. Who’s in charge here? Numerous federal agencies have responsibility for space activities, including the FAA’s oversight of commercial space launches, NASA’s scientific space activities, the Department of Defense’s national security space launches, the State Department’s involvement in international trade issues, and the Department of Commerce’s advocacy and promotion of the industry. According to the National Academy of Sciences, aligning the strategies of the various civil and national security space agencies will address many current issues arising from or exacerbated by the current uncoordinated, overlapping, and unilateral strategies. A national space launch strategy could identify and fill gaps in federal policy concerning the commercial space launch industry, according to senior FAA and Commerce officials, the GAO stated. The GAO stated that its research identified several gaps in federal policy for commercial space launches. For example, while FAA has safety oversight responsibility for the launch and re-entry of commercial space vehicles, agency officials told the GAO that no federal entity has oversight of orbital operations, including the collision hazard while in orbit posed by satellites and debris such as spent rocket stages or defunct satellites, the GAO stated.

3. Is it safe? The FAA will need to determine whether its current safety regulations are appropriate for all types of commercial space vehicles, operations, and launch sites, the GAO stated. If the industry begins to expand, as senior FAA officials predict, to 200 to 300 annual launches, a reassessment of the FAA’s resources and areas of expertise would be appropriate. Moreover, as NASA-sponsored commercial space launches increase, the FAA’s need for regulatory resources and expertise may change, the GOA stated. The FAA is responsible for the protection of the uninvolved public, which could be affected by a failed mission. The FAA has interpreted this limited authority as allowing it to regulate crew safety in certain circumstances and has been proactive in issuing a regulation concerning emergency training for crews and passengers. However, the FAA has not developed indicators that it would use to monitor the safety of the developing space tourism sector and determine when to step in and regulate human space flight, the GAO stated.

4. Airspace considerations: NextGen, the FAA’s grand plan to transform the current radar-based air traffic management system into a more automated, aircraft-centered, satellite-based system—will need to accommodate spacecraft that are traveling to and from space through the national airspace system, the GAO stated. As the commercial space launch industry grows and space flight technology advances, the FAA expects that commercial spacecraft will frequently make that transition and the agency will need tools to manage a mix of diverse aircraft and space vehicles in the national airspace system. In addition, the agency will need to develop new policies, procedures, and standards for integrating space flight operations into NextGen. For example, the agency will have to define new upper limits to the national airspace system to include corridors for flights transitioning to space and set new air traffic procedures for flights of various types of space vehicles. The FAA has begun to consider such issues and has developed a concept of operations document, the GAO found.

5. Conflict of interests: The GAO said in 2006 the FAA faced the potential challenge of overseeing the safety of commercial space launches while at the same time promoting the industry. While the GAO said it found no evidence that FAA’s promotional activities—such as sponsoring an annual industry conference and publishing industry studies—conflicted with its safety regulatory role, it noted that potential conflicts may arise as the space tourism sector develops.

6. Government sponsored insurance? In an effort to back US commercial space ventures the US government has indemnified launch operators but the law that allows for indemnification expires in December 2009, the GAO stated. The continuation of such federal involvement will assist industry growth, the GAO stated. For example, industry players have called for the continuation of indemnification to support US competitiveness. Indemnification secures another party against risk or damage. The U.S. government indemnifies launch operators by providing catastrophic loss protection covering third-party liability claims in excess of required launch insurance in the event of a commercial launch incident. Currently, launch operators are required to buy third-party liability insurance for up to $500 million in addition to insurance for their vehicle and its operations, and the US government provides up to $1.5 billion in indemnification.

7. When bad things happen: What will be the role of the National Transportation Safety Board (NTSB) in investigating any accidents that occur? According to the GAO, the NTSB does not have space transportation explicitly included in its statutory jurisdiction, although it does have agreements with FAA and the Air Force under which it will lead investigations of commercial space launch accidents. The 2008 commissioned report on human space flight suggested that Congress may want to consider explicitly designating a lead agency for accident investigations involving space vehicles to avoid potential overlapping jurisdictions, the GAO stated.

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Cooney is an Online News Editor and the author of the Layer 8 blog, Network World's daily home for the not-just-networking news. He has been working with Network World since 1992. You can reach him at mcooney@nww.com.